Commenting on its latest Quarterly Economic Bulletin for members, which contains a wealth of key UK economic data and provides an overview of current economic trends,
Chris Cummings, Director General of AMI, said: "The AMI Quarterly Economic Bulletin graphically shows the urgent need for a public policy response to a turbulent housing market.
“AMI has met with the Treasury, Bank of England, Financial Services Authority and Sir James Crosby to set out its case for decisive action. We have also spoken to all the political parties as we now believe that political pressure needs to be brought to bear if we are to stop a liquidity crunch becoming an economic crisis.“
Key highlights of the latest Economic Bulletin include:
• Frozen money markets show little sign of thawing
• Three month Libor continues to creep up
• Interbank lending rate nearly 100 basis points above Bank rate
• Oil and food prices send inflation soaring to 3.3%, the highest level since the Bank of England took control of monetary policy in 1997
• Upside risks to inflation constrict MPC's ability to cut rates to mitigate downside risks to growth
• Lenders forced to increase rates and tighten terms on which they lend
• Mortgage approvals for house purchase fall to lowest level on record
• Remortgaging, previously resilient, begins to decline
Chris Cummings added: "The financial position of lending institutions remains one of the main sticking points to the recovery of the mortgage market. Banks are undercapitalised following the large round of write-offs on wholesale instruments and are currently going through the protracted process of rebuilding their balance sheets. With capital market liquidity still very poor, funding costs high, and securitisations running at less than a tenth of the levels of recent years, institutions have not got access to cash to grow their businesses."
